Rolls Royce plc v. Doughty

In 1971, the British government acquired sole ownership of the gas-turbine-engine business of Rolls Royce Limited (Limited), which later was renamed Rolls Royce plc (RR) (defendant). Upon the acquisition, all Limited employees became RR employees on the same terms and conditions that applied to their Limited employment. D. S. Doughty (plaintiff) was one such employee. In September 1985, RR informed Doughty that she would be terminated on her sixtieth birthday in accordance with RR’s mandatory-retirement policy, which required women to retire at age 60 and men to retire at age 65. Doughty complained to the industrial board, alleging that her forced retirement violated Article 5(1) of Directive 76/297 (directive) of the European Council (council), which required European Economic Community (EEC) member states to take measures to combat sex-based discrimination. The industrial board ruled that Doughty could rely on the directive against RR because the directive was unconditional and precise and RR was an emanation of the British government due to the government’s significant influence over RR. The industrial board noted that a memorandum of understanding between RR and the government provided that RR had to pay appropriate attention to military business and consult with the government (1) about any potential reorganization or strategy changes that might substantially affect defense interests; (2) about any possible financing changes; (3) before entering into new business areas, disposing of existing significant interests, launching new engine projects, and major developments of existing projects; and (4) before appointing senior executives or setting directors’ compensation. The memorandum further provided that the government would appoint RR’s directors. The industrial board reached its conclusion notwithstanding its finding that RR acted as a private company with respect to labor relations (e.g., RR recognized the unions that represented Limited’s employees, RR did not recognize civil-service unions, and RR’s employees did not enjoy civil-service benefits). RR appealed.